Harnessing AI to Navigate Compliance in the Face of Growing Regulatory Demands
In an era where regulatory frameworks are evolving rapidly, businesses are finding themselves increasingly burdened by privacy obligations. The tightening of budgets compounds this pressure, leading many companies—large and small—to seek innovative solutions. Enter artificial intelligence (AI): a technological marvel capable of automating compliance processes, significantly transforming the landscape of data privacy management.
Legal Risks in a Regulated World
Businesses today face a maze of state, federal, and international privacy regulations. “When companies lack resources, they end up taking on legal risk,” states Daniel Barber, co-founder and CEO of DataGrail, a prominent data privacy management platform. He emphasizes that AI can empower organizations to achieve what traditionally required extensive human labor. “AI provides the capability for a business to have people that could do ten times the work of what they could do before,” he explains. This capability is not merely about replacing human input but enhancing it, especially amid tightening budgets.
The Role of AI Compliance Tools
Vendors in the AI space are keen to clarify that their tools are not designed to eliminate the necessity of human judgement. Instead, they aim to automate repetitive tasks and improve efficiency, allowing compliance professionals to better navigate the complexities of regulatory landscapes. For instance, Transcend, which serves clients such as Patreon and Robinhood, focuses on automating the “more tedious tasks” of deciphering the regulatory context. Ben Brook, its CEO, highlights how AI can streamline research on applicable statutes, enabling compliance teams to allocate resources more effectively.
A Longstanding Trend Towards Efficiency
The move to automate compliance isn’t a new concept, but it has gained momentum with tech giants like Meta Platforms and Amazon seeking to do more with fewer resources. Keith Enright, a partner at Gibson, Dunn & Crutcher LLP and a former chief privacy officer at Google, notes, “The resource allocation to privacy has not come close to matching the demands of business increasing in terms of both volume and velocity.” This discrepancy has propelled the broader acceptance of AI as a crucial tool for enhancing compliance efforts.
AI: Expanding Human Capability
AI’s advancements, particularly in natural language processing, are reshaping how compliance teams operate. Brook explains that these large language models help companies “put scale behind the human reviewer,” facilitating a broader reach in gathering contextual information. Traditional compliance tools often require manual rule creation, slowing progress. In contrast, AI-driven systems have pre-trained models ready to assess compliance based on initial prompts, which markedly reduces time and effort.
For example, while traditional tools assist in data mapping and risk assessment, AI-powered solutions like DataGrail can automatically identify key risks and generate necessary assessments for review. This acceleration enables businesses to bring compliant products to market faster—a critical advantage in competitive landscapes.
The Balance of Human Oversight and AI Efficiency
Despite the promise of AI, Barber stresses the importance of human oversight in compliance processes. “You still need a human to have oversight into how decisions are made, especially when they relate to legal decisions,” he cautions. The integration of AI does not absolve companies of responsibility; rather, it shifts the nature of work, prioritizing skills that AI cannot replicate.
Navigating the Risks of Automation
The reliance on AI in compliance also introduces significant risks, particularly without human oversight. Stacey Brandenburg of ZwillGen PLLC warns that the absence of human filtering can lead to misinterpretations or incomplete analyses. This vulnerability is evident given the existence of “hallucinations,” a phenomenon where AI systems generate inaccurate information. Enright echoes this sentiment, emphasizing the need to put safeguards in place to mitigate such risks.
The stakes are particularly high when companies face regulatory scrutiny. Meta, having encountered serious legal challenges in the past, has shifted toward an AI-focused model amid a compliance reorganization post a $5 billion settlement with the FTC. While embracing innovation is vital, it raises questions about compliance staffing and accountability in such scenarios.
Separate But Equally Important: Resources for Smaller Players
Larger corporations undoubtedly have access to cutting-edge AI technologies, leaving smaller businesses at a potential disadvantage. Brook reassures that a well-structured AI system can rival or exceed human performance in privacy reviews. However, he cautions that poorly designed systems could yield far more harm than good. “No AI is better than bad AI,” he states, highlighting the need for careful investment and development, especially for smaller entities that may lack the luxury of extensive resources.
The Complexity of Consent Decrees
As many firms navigate compliance software under the scrutiny of consent decrees, clarity around AI’s role remains limited. Brandenburg notes that while compliance obligations reside with the companies, the guidelines for using such automated tools are still evolving. The current landscape leaves organizations grappling with how best to harness AI capabilities while adhering to mandated legal frameworks.
In this rapidly changing environment, businesses must remain vigilant, embracing technology without losing sight of the human element integral to compliance.
